3- 1

The Arithmetic Mean is

the most widely used measure
of location and shows the
central value of the data.

It is calculated by
summing the values
and dividing by the
number of values.

The major characteristics of the mean are:

A verage
Joe

It

requires the interval scale.

All values are used.
It is unique.
The sum of the deviations from the mean is 0.
Characteristics of the Mean

For ungrouped data, the

Population Mean is the
sum of all the population
values divided by the total
number of population
values:

3- 2

where
is the population mean
N is the total number of observations.
X is a particular value.
indicates the operation of adding.
Population Mean

A Parameter is a measurable characteristic of a

population.
The Kiers
family owns
four cars. The
following is the
current mileage
on each of the
four cars.

3- 3

56,000
42,000
23,000
73,000
Find the mean mileage for the cars.

56,000 ... 73,000

48,500
4
Example 1

3- 4

For ungrouped data, the sample mean is

the sum of all the sample values divided
by the number of sample values:

X
X
n
where n is the total number of
values in the sample.
Sample Mean

3- 5

A statistic is a measurable characteristic of a sample.

A sample of
five
executives
received the
following
bonus last
year ($000):

14.0,
15.0,
17.0,
16.0,
15.0

X 14.0 ... 15.0 77

X

15.4
n
5
5
Example 2

Properties of the Arithmetic Mean

Every

3- 6

set of interval-level and ratio-level data has a

mean.
All

the values are included in computing the mean.

A set

of data has a unique mean.

The

mean is affected by unusually large or small

data values.
The

arithmetic mean is the only measure of location

where the sum of the deviations of each value from
the mean is zero.
Properties of the Arithmetic Mean

3- 7

Consider the set of values: 3, 8, and 4.

The mean is 5. Illustrating the fifth
property

( X X ) (3 5) (8 5) (4 5) 0

Example 3

3- 8

The Weighted Mean of a set of

numbers X1, X2, ..., Xn, with
corresponding weights w1, w2, ...,wn,
is computed from the following
formula:

( w1 X 1 w2 X 2 ... wn X n )
Xw
( w1 w2 ...wn )
Weighted Mean

3- 9

During a one hour period on a

hot Saturday afternoon cabana
boy Chris served fifty drinks.
He sold five drinks for $0.50,
fifteen for $0.75, fifteen for
$0.90, and fifteen for $1.10.
Compute the weighted mean of
the price of the drinks.

5($0.50) 15($0.75) 15($0.90) 15($1.15)

Xw
5 15 15 15
$44.50

$0.89
50

Example 4

3- 10

The Median is the

midpoint of the values after
they have been ordered from
the smallest to the largest.

There are as many

values above the
median as below it in
the data array.

For an even set of values, the median will be the

arithmetic average of the two middle numbers and is
found at the (n+1)/2 ranked observation.

The Median

3- 11

The ages for a sample of five college students are:

21, 25, 19, 20, 22.
Arranging the data
in ascending order
gives:
19, 20, 21, 22, 25.
Thus the median is
21.
The median (continued)

3- 12

The heights of four basketball players, in inches,

are: 76, 73, 80, 75.
Arranging the data in
ascending order gives:

73, 75, 76, 80

Thus the median is 75.5.

The median is found

at the (n+1)/2 =
(4+1)/2 =2.5th data
point.
Example 5

3- 13

Properties of the Median

There

is a unique median for each data set.

It

is not affected by extremely large or small

values and is therefore a valuable measure of
location when such values occur.
It

can be computed for ratio-level, intervallevel, and ordinal-level data.

It

can be computed for an open-ended

frequency distribution if the median does not
lie in an open-ended class.
Properties of the Median

3- 14

The Mode is another measure of location and

represents the value of the observation that appears
most frequently.

Example 6: The exam scores for ten students are:

81, 93, 84, 75, 68, 87, 81, 75, 81, 87. Because the score
of 81 occurs the most often, it is the mode.
Data can have more than one mode. If it has two
modes, it is referred to as bimodal, three modes,
trimodal, and the like.
The Mode: Example 6

Symmetric distribution:

3- 15

A distribution having the

same shape on either side of the center

Skewed distribution:

One whose shapes on either

side of the center differ; a nonsymmetrical distribution.

Can be positively or negatively skewed, or bimodal

The Relative Positions of the Mean, Median, and Mode

Zero skewness

Mean
=Median
=Mode

M ean
M e d ia n
M ode

The Relative Positions of the Mean, Median, and Mode:

Symmetric Distribution

3- 16

 Positively skewed: Mean and median are to the right of the

mode.
Mean>Median>Mode

M ode

M ean

M e d ia n

The Relative Positions of the Mean, Median, and Mode:

Right Skewed Distribution

3- 17

3- 18

Negatively Skewed: Mean and Median are to the left of the Mode.

Mean<Median<Mode

M ean

M ode
M e d ia n

The Relative Positions of the Mean, Median, and

Mode: Left Skewed Distribution

3- 19

The Geometric Mean

(GM) of a set of n numbers
is defined as the nth root
of the product of the n
numbers. The formula is:

GM

( X 1)( X 2 )( X 3)...( Xn )
The geometric mean is used to
average percents, indexes, and
relatives.
Geometric Mean

3- 20

The interest rate on three bonds were 5, 21, and 4

percent.
The arithmetic mean is (5+21+4)/3 =10.0.
The geometric mean is

GM

(5)(21)(4) 7.49

The GM gives a more conservative

profit figure because it is not
heavily weighted by the rate of
21percent.
Example 7

3- 21

Another use of the

geometric mean is to
determine the percent
increase in sales,
production or other
business or economic
series from one time
period to another.
GM

( Value at end of period)

1
(Value at beginning of period)

Geometric Mean continued

3- 22

The total number of females enrolled in American

colleges increased from 755,000 in 1992 to 835,000
in 2000. That is, the geometric mean rate of increase
is 1.27%.

835,000
GM 8
1 .0127
755,000

Example 8

3- 23

Dispersion
refers to the
spread or
variability in
the data.

range,
mean deviation, variance, and standard
deviation.
Measures of dispersion include the following:

Range = Largest value Smallest value

Measures of Dispersion

3- 24

The following represents the current years Return on

Equity of the 25 companies in an investors portfolio.

Highest value: 22.1

Lowest value: -8.1

Range = Highest value lowest value

= 22.1-(-8.1)
= 30.2
Example 9

3- 25

Mean
Deviation
The arithmetic
mean of the
absolute values
of the
deviations from
the arithmetic
mean.

M D =

The main features of the

mean deviation are:
All

values are used in the

calculation.
It is not unduly influenced by
large or small values.
The absolute values are
difficult to manipulate.

X - X
n
Mean Deviation

3- 26

The weights of a sample of crates containing books

for the bookstore (in pounds ) are:
103, 97, 101, 106, 103
Find the mean deviation.
X = 102
The mean deviation is:

MD

X X

103 102 ... 103 102

n
1 5 1 4 5

2.4
5

Example 10

3- 27

Variance:

the
arithmetic mean
of the squared
deviations from
the mean.

Standard deviation:
deviation

The square
root of the variance.

Variance and standard Deviation

3- 28

The major characteristics of the

Population Variance are:

Not influenced by extreme values.
The units are awkward, the square of the
original units.
All values are used in the calculation.

Population Variance

3- 29

Population Variance formula:

(X - )2
N

X is the value of an observation in the population

m is the arithmetic mean of the population
N is the number of observations in the population

Population Standard Deviation formula:

Variance and standard deviation

3- 30

In Example 9, the variance and standard deviation are:

(X

- )2
N

( - 8 .1 - 6 .6 2 ) 2 + ( - 5 .1 - 6 .6 2 ) 2 + ... + ( 2 2 .1 - 6 .6 2 ) 2
25

= 4 2 .2 2 7

= 6 . 4 9 8
Example 9 continued

3- 31

Sample variance (s2)

2

s =

(X - X )
n -1

Sample standard deviation (s)

s s

Sample variance and standard deviation

3- 32

The hourly wages earned by a sample of five students are:

$7, $5, $11, $8, $6.
Find the sample variance and standard deviation.
X 37
X

7.40
n
5

X X
7 7.4 ... 6 7.4
2
s

n 1
5 1
21.2

5.30
5 1
2

5.30 2.30
Example 11

3- 33

Chebyshevs theorem: For any set of

observations, the minimum proportion of the values

that lie within k standard deviations of the mean is at
least:

1
where

1
k

k is any constant greater than 1.

Chebyshevs theorem

3- 34

Empirical Rule: For any symmetrical, bell-shaped

distribution:
About

68% of the observations will lie within 1s

the mean
About

95% of the observations will lie within 2s of

the mean
Virtually

all the observations will be within 3s of

the mean
Interpretation and Uses of the
Standard Deviation

3- 35

Bell -Shaped Curve showing the relationship between and .

68%
95%
99.7%

Interpretation and Uses of the Standard Deviation

3- 36

The

Mean of a sample of data

organized in a frequency
distribution is computed by the
following formula:

Xf
X
n

The Mean of Grouped Data

3- 37

A sample of ten
movie theaters
in a large
metropolitan
area tallied the
total number of
movies showing
last week.
Compute the
mean number of
movies
showing.

X 66
X

6.6
n
10
Example 12

3- 38

The Median of a sample of data organized in a

frequency distribution is computed by:
n
CF
Median L 2
(i )
f

where L is the lower limit of the median class, CF is the

cumulative frequency preceding the median class, f is
the frequency of the median class, and i is the median
class interval.
The Median of Grouped Data

3- 39

To determine the median class for grouped

data
Construct a cumulative frequency distribution.
Divide the total number of data values by 2.
Determine which class will contain this value. For
example, if n=50, 50/2 = 25, then determine which
class will contain the 25th value.

Finding the Median Class

3- 40

Example 12 continued

3- 41

From the table, L=5, n=10, f=3, i=2, CF=3

n
10
CF
3
Median L 2
(i ) 5 2
(2) 6.33
f
3

Example 12 continued

3- 42

The Mode for grouped data is

approximated by the midpoint of the
class with the largest class frequency.

The modes in example 12 are 6 and 10

and so is bimodal.

The Mode of Grouped Data